Action No. 9001-03466

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                              IN THE COURT OF QUEEN'S BENCH OF ALBERTA
                                    JUDICIAL DISTRICT OF CALGARY

                     -----------------------------------------------------------

                     BETWEEN:
                                   CANADA SOUTHERN PETROLEUM LTD.
                                 MAGELLAN PETROLEUM CORPORATION and
                                    PANTEPEC INTERNATIONAL, INC.
                                                                      Plaintiffs

                                              - and -

                     AMOCO  CANADA  PETROLEUM  COMPANY  LTD.,  AMOCO  PRODUCTION
                     COMPANY,   AMOCO  CANADA  RESOURCES  LTD.   (formerly  DOME
                     PETROLEUM LIMITED),  ANDERSON  OIL AND  GAS INC.  (formerly
                     COLUMBIA  GAS  DEVELOPMENT  OF  CANADA  LTD.),   MOBIL  OIL
                     CANADA LTD.,  IMPERIAL OIL RESOURCES LIMITED (formerly ESSO
                     RESOURCES CANADA LIMITED),  MOBIL RESOURCES LTD. and  MOBIL
                     OIL CANADA PROPERTIES
                                                                      Defendants

                                              - and -

                     ANDERSON   OIL   AND   GAS   INC.  (formerly  COLUMBIA  GAS
                     DEVELOPMENT OF CANADA LTD.), MOBIL RESOURCES LTD. (formerly
                     CANADIAN SUPERIOR OIL LTD.), IMPERIAL OIL RESOURCES LIMITED
                     (formerly ESSO RESOURCES CANADA LIMITED),  MOBIL OIL CANADA
                     LTD.,  ALLIED-SIGNAL INC.,  HOME OIL COMPANY LIMITED,  KERN
                     COUNTY LAND COMPANY and MOBIL OIL CANADA PROPERTIES
                                                                   Third Parties
                                              - and -

                       IMPERIAL OIL LIMITED and ESSO RESOURCES CANADA LIMITED
                                (now IMPERIAL OIL RESOURCES LIMITED)
                                                                  Fourth Parties
                     AND BETWEEN:

                               COLUMBIA GAS DEVELOPMENT OF CANADA LTD.
                                   (now ANDERSON OIL AND GAS INC.)

                                                       Plaintiff by Counterclaim

                                              - and -

                     CANADA  SOUTHERN  PETROLEUM LTD.,  AMOCO  CANADA  RESOURCES
                     LTD.,   AMOCO  CANADA  PETROLEUM  COMPANY  LTD.,   CANADIAN
                     SUPERIOR  OIL  LTD.  (now MOBIL RESOURCES LTD.),  MOBIL OIL
                     CANADA LTD., IMPERIAL OIL LIMITED and ESSO RESOURCES CANADA
                     LIMITED (now IMPERIAL OIL RESOURCES LIMITED)

                                                      Defendants by Counterclaim

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                     AMENDED STATEMENT  OF DEFENCE  OF ANDERSON OIL AND GAS INC.
                     (formerly  COLUMBIA  GAS  DEVELOPMENT  OF  CANADA  LTD.) TO
                     AMENDED   THIRD   PARTY   NOTICE   FILED  BY  AMOCO  CANADA
                     PETROLEUM  COMPANY  LTD.,   AMOCO  PRODUCTION  COMPANY  AND
                     AMOCO  CANADA  RESOURCES  LTD.   (formerly  DOME  PETROLEUM
                     LIMITED)

                     -----------------------------------------------------------

                                          McCarthy Tetrault
                                      Barristers and Solicitors
                                  Suite 3300, 421 Seven Avenue S.W.
                                          Calgary, Alberta
                                               T2P 4K9

                                          J. Glenn Friesen
                                        Phone: (403) 260-3508

                                       File No.: 126169-108505


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                                                               Action 9001-03466

                      THE COURT OF QUEEN'S BENCH OF ALBERTA
                          JUDICIAL DISTRICT OF CALGARY
BETWEEN:
                    CANADA SOUTHERN PETROLEUM LTD., MAGELLAN
                PETROLEUM CORPORATION and PANTEPEC INTERNATIONAL,
                                      INC.
                                                                      Plaintiffs
                                     -and-

            AMOCO    CANADA    PETROLEUM    COMPANY   LTD.,    AMOCO
            PRODUCTION   COMPANY,   AMOCO   CANADA   RESOURCES  LTD.
            (formerly DOME PETROLEUM LIMITED),  ANDERSON OIL AND GAS
            INC. (formerly COLUMBIA GAS DEVELOPMENT OF CANADA LTD.),
            MOBIL OIL  CANADA LTD.,  IMPERIAL OIL  RESOURCES LIMITED
            (formerly  ESSO  RESOURCES  OF  CANADA  LIMITED)   MOBIL
            RESOURCES LTD. and MOBIL OIL CANADA PROPERTIES
                                                                      Defendants
                                     -and-

            ANDERSON  OIL  AND  GAS  INC.   (formerly  COLUMBIA  GAS
            DEVELOPMENT  OF  CANADA  LTD.),   MOBIL  RESOURCES  LTD.
            (formerly  CANADIAN  SUPERIOR  OIL  LTD.),  IMPERIAL OIL
            RESOURCES   LIMITED   (formerly  ESSO  RESOURCES  CANADA
            LIMITED),  MOBIL  OIL  CANADA  LTD., ALLIED-SIGNAL INC.,
            HOME OIL  COMPANY  LIMITED,  KERN  COUNTY  LAND  COMPANY
            and MOBIL OIL CANADA PROPERTIES
                                                                   Third Parties
                                     -and-

             IMPERIAL OIL LIMITED and ESSO RESOURCES CANADA LIMITED
                      (now IMPERIAL OIL RESOURCES LIMITED)

                                                                  Fourth Parties
AND BETWEEN:

                  COLUMBIA GAS DEVELOPMENT OF CANADA LTD. (now
                           ANDERSON OIL AND GAS INC.)

                                                       Plaintiff by Counterclaim
                                     -and-

            CANADA   SOUTHERN    PETROLEUM   LTD.,    AMOCO   CANADA
            RESOURCES   LTD.,   AMOCO   CANADA   PETROLEUM   COMPANY
            LTD.,  CANADIAN SUPERIOR OIL LTD.  (now  MOBIL RESOURCES
            LTD.),  MOBIL OIL CANADA LTD.,  IMPERIAL OIL LIMITED and
            ESSO   RESOURCES   CANADA   LIMITED  (now  IMPERIAL  OIL
            RESOURCES LIMITED)
                                                      Defendants by Counterclaim



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AMENDED  STATEMENT OF DEFENCE  OF ANDERSON OIL AND GAS INC.  (formerly  COLUMBIA
GAS DEVELOPMENT OF CANADA LTD.)  TO  AMENDED  THIRD PARTY  NOTICE FILED BY AMOCO
CANADA  PETROLEUM  COMPANY  LTD.,  AMOCO  PRODUCTION  COMPANY  AND  AMOCO CANADA
RESOURCES LTD. (formerly DOME PETROLEUM LIMITED)


1. Except as hereinafter  admitted,  or as admitted in the Amended  Statement of
Defence filed by Anderson Oil and Gas Inc. (formerly Columbia Gas Development of
Canada Ltd.)  ("Columbia"),  Columbia  denies each and every  allegation  in the
Amended Amended Statement of Claim and the Amended Third Party Notice.  The said
Amended Statement of Defence is incorporated herein by reference.

2.  Columbia  denies the  liability of the  defendants  Amoco  Canada  Petroleum
Company Ltd. ("Amoco Canada"), Amoco Production Company ("Amoco Production") and
Amoco  Canada   Resources  Ltd.   (formerly  Dome  Petroleum   Limited)  ("Amoco
Resources") to the Plaintiffs.

3. In the alternative to paragraph 2 herein, if any of the said defendants Amoco
Canada, Amoco Production or Amoco Resources are liable to the Plaintiffs,  which
is not admitted but is expressly denied, the said defendants are not entitled to
claim  contribution  and  indemnity  from  Columbia  for any portion of the said
liability.

4. In answer to paragraphs 2 and 3 of the Amended Third Party  Notice,  Columbia
specifically  denies that there is any shared obligation as alleged.

5. In  answer  to  paragraph  4 of the  Amended  Third  Party  Notice,  Columbia
specifically denies any obligation as alleged. Columbia admits entering into the
Columbia  Farmout,  but  denies  that the  Columbia  Farmout  has been  properly
characterized  or described in the Amended  Third Party  Notice.  Columbia  will
refer at trial to the Columbia Farmout for its precise terms and effect.

6.  Columbia  specifically  denies any  agreement to indemnify and hold harmless
Amoco Canada or Amoco  Resources as alleged in paragraph 4 of the Amended  Third
Party  Notice.  The  indemnity  given by Columbia  was  restricted  in scope and
duration in the following ways:


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         a) The indemnity was restricted to claims by third parties  arising out
         of Columbia's  operations prior to earning.  Earning has occurred,  and
         the indemnity is therefore no longer in force and effect.

         b) In the  alternative,  if the  indemnity  extends  to claims by other
         parties to the Columbia Farmout, which is not admitted but is expressly
         denied, it was limited to claims prior to earning,  and is therefore no
         longer in force and effect.

         c) In the  alternative  to (a) and (b),  if the  indemnity  is still in
         force and effect,  which is not admitted but is expressly denied, it is
         limited to third party claims arising from Columbia's operations of the
         Block I lands following  earning,  and is not related in any way to the
         claims in this action.

         d) In the  alternative  to (c), if the  indemnity is still in force and
         effect,  and if it extends to claims by other  parties to the  Columbia
         Farmout,  all of which is not  admitted but is  expressly  denied,  the
         indemnity is limited to claims  arising from  Columbia's  operations of
         the Block I lands,  and is not related in any way to the claims in this
         action.

         e) The  indemnity  relates  only  to  claims  arising  from  operations
         actually  undertaken by Columbia,  and not to any claims for operations
         not undertaken.

6A. In further answer to paragraph 4 of the Amended Third Party Notice,  even if
the Plaintiffs are granted an adjustment of the Carried Interest  Account,  such
adjustment  would not reduce the  liability of Amoco  Canada or Amoco  Resources
with  respect  to the  Joint  Account,  nor  would  this  provide  any basis for
indemnity.  As among Columbia,  Amoco Canada and Amoco Resources,  the amount of
the Joint Account is established by  expenditures  made by Columbia on behalf of
the Joint Operators.

6B.      The right of Amoco Canada and Amoco Resources to challenge  Operational
Costs is as  set out in  Clause 4  of the  relevant  Accounting Procedure  which
states:


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         "...All  statements  rendered to  Non-Operator  by Operator  during any
         calendar  year shall be  conclusively  presumed  to be true and correct
         after  eighteen  months  following the close of any such calendar year,
         unless with said eighteen months  Non-Operator  takes written exception
         thereto and makes claim on Operator  for  adjustment  or  commences  an
         audit of  Operator's  accounts and records  relating to the  accounting
         hereunder.  Failure  on the  part  of  Non-Operator  to make  claim  on
         Operator  for  adjustment,  or to commence an audit  within such period
         shall  establish  the  correctness  thereof and  preclude the filing of
         exceptions thereto or the making of claims for adjustment thereon..."

6C. Neither Amoco Canada nor Amoco  Resources has commenced an audit or made any
written  exception  to  expenditures  since June 30,  1988.  These  amounts  are
therefore conclusively presumed to be true and correct.

6D. In the alternative and in further answer to paragraph 4 of the Amended Third
Party Notice,  the  Plaintiffs  have not alleged gross  negligence or willful or
wanton misconduct.  Columbia will seek further  particulars of these allegations
in the Amended  Third Party Notice.  Furthermore,  since these  allegations  are
based on a different  cause of action than the  Plaintiffs'  claim,  they cannot
form the basis for a claim for  indemnity.  Further or in the  alternative,  the
liability  of  Columbia  as  operator  is limited to where there has been fraud,
dishonesty or gross neglect, or where there has been failure to remedy a default
after  receipt of  written  notice of such  default.  No  allegations  of fraud,
dishonesty or gross neglect have been pleaded by the  Plaintiffs,  and no notice
of default has been given by the Plaintiffs, Amoco Canada or Amoco Resources for
any operations for any operations conducted by Columbia.

6E. In further  answer to  paragraph 4 of the Amended  Third Party  Notice,  the
Production  Facilities Agreement does not form an basis for the alleged claim of
indemnity.  Furthermore,  neither Amoco Canada nor Amoco Resources has commenced
any audit of expenditures, nor has any written execution or claim for adjustment
been made.  Statements rendered by Columbia are therefore  conclusively presumed
to be true and correct.


<PAGE>

7. In answer to the  entire  Amended  Third  Party  Notice,  Columbia  has never
assumed any obligation, by way of indemnity or otherwise, relating to Clause III
3.1(D) of the 1959  Agreement.  But  although  Columbia  has never  assumed  any
obligation to assure the earliest  feasible  development and marketing of oil or
gas,  Columbia  has in fact made every effort to market and develop the gas from
the Block I lands. Columbia has continually researched marketing  opportunities,
Columbia has from time to time  proposed  marketing  opportunities  to the other
working interest owners, and there has been production and marketing of gas from
the Kotaneelee lands.

8. If Amoco Canada,  Amoco  Production or Amoco  Resources have any liability to
the  Plaintiffs,  which  is not  admitted,  but  is  specifically  denied,  this
liability was caused by or contributed to by the actions of Amoco Canada,  Amoco
Production or Amoco Resources or any one or more of them, and not by any actions
of Columbia.

                                   Particulars

         a) Amoco Canada,  Amoco  Production or Amoco  Resources,  or any one or
         more of them,  developed  and marketed gas from other lands in the area
         in which they had an interest and not from the Kotaneelee area;

         b) Amoco Canada,  Amoco  Production or Amoco  Resources,  or any one or
         more of them rejected gas marketing proposals made by Columbia;

         c) Amoco Canada,  Amoco  Production or Amoco  Resources,  or any one or
         more of them  initiated  the  decision  to require  the gas plant to be
         taken out of service;  this decision was voted on  affirmatively by all
         parties except Columbia;

         d) Amoco Canada,  Amoco  Production or Amoco  Resources,  or any one or
         more of  them  (hereinafter  referred  to as  "the  Amoco  Companies"),
         resisted Columbia's efforts to put the gas plant back in service and to
         produce and market the gas. In particular,

                  i)  The  Amoco  Companies   initially   refused  to  authorize
                  expenditures  to put the gas plant back in service  until such
                  time as the Production Facilities Agreement was entered into;


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                  ii) The Amoco Companies refused to include any provision as to
                  sharing of markets in the Production Facilities Agreement; the
                  Amoco Companies indicated that they wanted to market their own
                  share of production of gas;

                  iii) Once the  Production  Facilities  Agreement  was  signed,
                  Amoco  Canada  moved  to take  over  operatorship  under  that
                  Agreement  on the  limited  grounds of supposed  greater  cost
                  efficiency.  Amoco  Canada,  Esso and Mobil voted in favour of
                  Amoco Canada becoming Operator under that Agreement,  Columbia
                  undertook to assign Operatorship to Amoco Canada at such times
                  as Amoco  Canada  (1)  agreed to  execute  Authorizations  for
                  Expenditure   committing  to  the  project,  (2)  Brought  its
                  outstanding  account into good standing,  (3) Assumed existing
                  third  party  obligations  already  in place  and (4)  Assumed
                  Operatorship of the entire project so that there would be only
                  one Operator. Amoco Canada did not agree to these requirements
                  and  specifically  advised  Columbia  that it did not  want to
                  operate  the wells.  Amoco  Canada has  subsequently  executed
                  Authorizations  for  Expenditure  and has  paid  its  share of
                  expenditures.

                  iv) In 1989, Columbia and Esso entered into one year contracts
                  for  marketing  Kotaneelee  gas to Canwest Gas Supply Inc. The
                  Amoco Companies  refused to sign similar contracts and did not
                  sign any other  contract so that in net result,  Columbia  and
                  Esso carried the Amoco Companies, crediting to them a share of
                  the revenue  received  under those  contracts,  and  depriving
                  Columbia of its full share of revenue, and reducing the amount
                  of revenue that would have been Operational  Receipts credited
                  to the Carried Interest Account had the Amoco Companies signed
                  a contract.

         e) Amoco Resources has at all times remained the operator of all lands,
         save and except to the extent of obligations assumed by Columbia in the
         Block I lands pursuant to the Columbia Farmout.


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8D. In further answer to the whole of the Amended Third Party Notice,  the Amoco
Companies have authorized all  expenditures  made for the Joint Account and have
paid their share of expenditures. The Amoco Companies were advised on an ongoing
basis of all operations and  activities,  and had the opportunity to participate
in decisions involving  operations and activities.  The Amoco Companies also had
full  opportunity  to audit the Joint  Account but chose not to do so. The Amoco
Companies  have also  acknowledged  in writing that they are satisfied  with the
operations conducted by Columbia.  Columbia has relied on this conduct of Amoco.
Amoco is therefore  estopped from now asserting that Columbia's  operations were
not carried out properly.

9. In further  answer to the entire  Amended Third Party  Notice,  any claim for
indemnity  against  Columbia is barred by the Limitation of Actions Act,  R.S.A.
1980,  c.L-15,  or the  Limitation  of Actions  Act,  R.S.Y.  1986,  c. 104,  or
alternatively by laches.

         WHEREFORE  Columbia  prays  that the claims  against it in the  Amended
Third Party Notice be dismissed  with costs in favour of Columbia on a solicitor
and client basis, or such other basis as to this Honourable Court may seem just.

         DATED at the City of Calgary, in the Province of Alberta, this 25th day
of January, 1994 AND DELIVERED by McCarthy Tetrault,  Barristers and Solicitors,
Solicitors for the Third Party Columbia, whose address for service is in care of
the said Solicitors at Suite 3300,421 Seven Ave. S.W., Calgary, Alberta T2P 4K9.